Shiseido commences tender offer to acquire Bare Escentuals

Update on January 25, 2010:

Shiseido Company, Ltd., a Japan-based cosmetics manufacturer, has commenced a tender offer through its wholly-owned subsidiary Blush Acquisition Corporation, to acquire all outstanding shares of Bare Escentuals, Inc. for $18.20 per share in cash. The tender offer is scheduled to expire on March 8, 2010.

Bare Escentuals is a US-based developer, marketer and distributor of cosmetic products.

Announcement (January 14, 2010):

Shiseido and Bare Escentuals have entered into a definitive agreement, pursuant to which Shiseido will acquire Bare Escentuals for approximately $1,700 million through an all-cash tender offer and second-step merger.

Under the agreement, Shiseido, through a US subsidiary, will make an offer to purchase all outstanding shares of Bare Escentuals' common stock for $18.20 per share. The tender offer price represents a 40.8% premium to Bare Escentuals' average closing stock price over the last three-month period ended January 13, 2010, and a 39.9% premium over the closing price of Bare Escentuals' common stock on January 13, 2010.

Following completion of the tender offer, Shiseido intends to acquire the remaining outstanding shares of Bare Escentuals common stock for $18.20 per share through a second-step merger.

Leslie Blodgett, the Chief Executive Officer of Bare Escentuals, has agreed to exchange 40% of her existing common stock ownership in Bare Escentuals 1 for a continuing interest in Bare Escentuals following completion of the tender offer. Leslie Blodgett currently owns approximately 6% of Bare Escentuals' outstanding common stock. In connection with and as a condition to the offer, Berkshire Partners LLC and certain of its affiliated entities, which collectively hold approximately 16% of Bare Escentuals' outstanding common stock, have agreed to tender their shares into the offer.

BofA Merrill Lynch (Bank of America Corporation) is acting as exclusive financial advisor, while Shearman & Sterling LLP and Mori Hamada & Matsumoto are acting as joint legal advisors to Shiseido. Goldman, Sachs & Co. is acting as exclusive financial advisor, while Ropes & Gray LLP is acting as legal advisor to Bare Escentuals on the transaction.

The transaction which was approved by the Boards of Directors of both companies by unanimous vote of those directors present and voting, is expected to close by April 2010.

Deal Value (US$ Million) 1700
Deal Type                Acquisition
Sub-Category             100% Acquisition
Deal Status              Announced: 2010-01-14

Deal Participants

Target (Company)   Bare Escentuals, Inc.
Acquirer (Company) Shiseido Company Ltd.
Vendor (Company)   Undisclosed Vendors

Deal Rationale

The acquisition expands Shiseido's brand portfolio into the mineral-based cosmetics market and creates a complementary multi-channel and global distribution network. The transaction strengthens Shiseido's U.S. and European business and immediately accelerates Bare Escentuals' growth outside of North America providing greater access to Japan, one of the world's largest cosmetics markets, as well as other fast-growing Asian markets such as China. Thus, the transaction maximizes both companies' production capabilities and R&D resources.

Bid Premium ($ per share) 39.9

Related terms: acquisition, advisor, bank, china, distributor, executive, japan, legal, manufacturer, market, merger, north america, products, sterling